Identifying the optimal technological solutions for treasury to - - PowerPoint PPT Presentation

Identifying the optimal technological solutions for treasury to make the right investment at the right time

• François Masquelier

Chairman of ATEL Founder of SimplyTreasury

• 1. To get a picture of current IT and TMS

environment and landscape

• 2. To determine areas for improvements to assess

potential gains from investing in technologies

• 3. To define inefficiencies to better evaluate

benefits of investments

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3 Objectives

• By understanding the current technological and TMS

landscape, you can interpret what your company could potentially gain from investing in automation, digitization, Fintech’s, blockchain, robotics and AI

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(1) Current TMS market place

• Most complex decision for Treasurers
• It is not simply launching an RFP with the same repeated questions ever…
• Treasury must have a vision of what it wants
• What will suit the best to my specific needs, and which is available now on the

market? I need to understand the market and tech’s behind solutions

• My needs should be in-detail described
• There is no silver bullet !
• Selecting and implementing the right mix of treasury technology solutions

within an established timeline and budget requires care

• They need to leverage new digital technologies…. Nevertheless, Corp’s

should resist the urge to tailor their new system to existing inefficient processes

• It is a fantastic opportunity to change processes

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TMS selection, not an easy decision

• World-class organization’s IT spend has dropped by 27% over past decade, but not

because finance is failing to invest

• Investing in tech today should be a lot cheaper than it used to be, while at the same

time AUTOMATION is greatly improving finance’s capabilities

• Savings in core tech are funding new initiatives and CIO’s work hard in the DRIVE TO

SIMPLICITY, which results in fewer applications

• Application of the mantra: « the best automation is ELIMINATION »
• Tech’s = the biggest force to reshape modern finance organizations
• However, to revamp finance organization you need to:

✓ increase spending on tech ✓ rationalize IT architecture ✓ further automate ✓ move to the cloud

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Hackett Group’s research reveals that actual tech spend has been consistently DECLINING since 2009

• IT landscape is VAST and FRAGMENTED
• Consists in MULTIPLE SOLUTIONS (partly interfaced)
• Usually SINGLE TENANT
• XL are MORE USED than ever → export of XL files to be

retreated/crunched with all risks of errors it includes

• Treasurers keep SOLUTIONS IN PLACE FOR LONG → prefer to postpone

changes, despite risks linked to longevity of current solutions

• Therefore, they try to « CONSOLIDATE », reinforce and supplement

existing IT structures to deliver expected reporting

• ROBOTIZATION helps automating existing processes, which remain too

manual

• New reports are made on XL or, for more sophisticated ones, on E.T.L.
• Eventually, NO TMS SOLUTION (with additional modules) is FULLY

SATISFACTORY

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Where are treasurers with IT organization?

• Treasury department has become highly tech dependent
• Biggest consumer of IT solutions among finance teams
• Paradoxically, finance technology has never been so sophisticated
• Absence of IT resources within treasury departments is an issue
• Recourse to IT department (although relationship not always easy) or to external

(IT) consultants

• With the increase of fraud cases and cyber risks, needs for interfacing, automating,

certifying, encrypting and BCPing etc… processes and systems

THE 2 PARADOXES OF SOPHISTICATION

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Tech (over-)dependency of Treasury

• In turbulent times, when distractions are abundant (e.g. volatility, negative

IR, new regulations, KYC’s, new IFRS standards, political issues, trade wars, BREXIT, tons of new API’s and jungle of solutions, etc…) need to keep in mind the CERR principle → goal is Cost-Effective Risk Reduction

• To free-up time what really matters (maximizing capital available for core

business risks), treasurers need to rigorously apply the OHIO principle → Only Handle It Once (unfortunately not always right in practice). Means doing holistic STP

• Need for embedding compliance and after such a tsunami. However it

sucks resources away from costumer-focused activities that should generate more value → mastering technology can provide framework to “set and forget” compliance

• Getting rid or mitigation of executional and analytical parts of the function

to concentrate on strategic one’s

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Multiple challenges make the job more complex overtime

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What influences treasury technology?

Requirements

• n treasury

technology are evolving

Company development and growth New regulations New tax regimes Changing accounting landscape In house bank and payment factory Increased pressure to cut costs Straight-Through Processing (STP) Demand for better information on exposures Increase importance

• f

risk analytics Increased external connectivity Dematerialization

• f paper

Seamless IT interfaces

Treasury organization and development Regulation, tax and accounting changes Treasury operations and demand for efficiency and centralization Keeping pace with tech developments / requirements, incl. prevention from cyber attacks and supporting business continuity

What will change on TMS landscape?

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8 Major Trends in Treasury Technology

TMS Vendor consolidation (a step further). Wide spectrum of niche solutions (market fragmentation - new comers from tech sphere) Different deployment models Explosion of new (smaller) IT providers Digital adoption and innovation in BI and automation TMS solutions became more generic and less open to specific developments Need for E.T.L. to develop reporting and bundle solutions Everything in the Cloud (SaaS for all - no more license for Software) 2 8 3 1 4 5 6 7

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TMS is the ANCHOR POINT of IT landscape connected to multiple platforms and data sources

TMS

ERP integration Payment Connectivity Bank portals Cash Forecasting Market data provider Digital technologies (API’s) Different niche tools Group reporting tools + TR + TriOptima Dealing Platforms

• Global treasury management is in constant state of evolution
• Hurdles like FX volatility, regulatory reforms, frauds, shifting market restrictions, taxes,

IFRS standards, etc… are causing unprecedented challenges for CFO’s and treasurers

• It limits financial visibility and slowing efficiencies with clunky and unfamiliar

management processes

• Old fashion XL come together with host of operational risks
• Market is unfortunately (too) crowded and review of the best solution is a nightmare
• Dilemma: best of breed solution specialized versus one global ERP type solution (e.g.

S/4Hana, Oracle E-business suite,…), the Arlester

• In some TMS lines (e.g. ION) there are solutions in competitions within their range (?!?)

“There is no best TMS solution. It should be analyzed case-by-case to find what will fit the best or at most with our needs, without fulfilling all of them. Arbitrage will be

• required. All this makes our choice complicate”

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What is the best TMS solution? Interesting question but impossible to answer

From Data to Dashboard

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Dashboarding layer Reporting layer/compliance Treasury IT Tools (Treasury Architecture)

TMS

+ + + +

Payment factory Tri Optima

… Treasury BIG DATA BULK

Classic approach Bottom-up Modern approach Top-down FX Platform ERP

(ETL)

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3 forms of using a TMS

aa

In house software(s) on

• wn servers

Single tenant Multi tenant

Hosted

In 1/3 party servers

1 2 3

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Need to CONCEPTUALIZE and plan treasury transformations

UNDERSTANDING TECH’S UNDERSTANDING VENDOR’S MARKET SETTING OWN (IT) TREASURY STRATEGY

IT architecture to be part of Treasury roadmap

1 2 3

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TMS contextual galaxy

Society influences

Economic & financial Influences Needs

Technology Compliance Psychological Influences

Digital Transformation, Real time data as a service mobility Compliance EMIR Refit, IFRS, MiFID2, PSD2,….) New technologies (IA, Machine learning, RPA, API’s,…)

Needs (Corporate) Offering (Solution providers)

CLOUD

Cost control Risk Management Increased visibility

Globalization Economics cycles Volatility

AGILITY

Source KYRIBA

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If SaaS is the future, what are the benefits delivered by that model?

• Pay for what you need
• No internal hardware or IT costs
• No upgrade costs (external or internal)
• Full redundancy: no single point of failure
• Higher availability: across all time zones
• Improved Recovery Time for minimized disruption
• Always on current release
• Newest software tools; no obsolescence
• Economies of scale → vendor viability
• Quicker implementation; no need for IT
• Ease of support; every client on same version
• No individual configuration/ support issues

Reduced Predictable Cost

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Implementation and Support

4

Innovation

3

Business Continuity

2

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Wishful thinking or future IT solution?

Ideally, my TMS should be on SaaS model, all-in one tool, pay-what you need, friendly-user shaped, customizable and with excellent technical support from vendor and with a dynamic key-user group.

• Pinpoint required investment areas
• Enable your decision-making tools to become more relevant
• By gauging LT effects of your department’s current

inefficiencies, you can better evaluate benefits of potential IT investments

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(2) Deciphering key areas for internal improvements

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TMS Prêt-à-Porter Solutions versus Taylor made

Does an intermediate level exist? What is in the middle?

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TMS’s became « prêt-à-porter » solutions which do not offer customization potential

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Best of breed versus integrated solution

Difficult to decide, although, maybe preference for the best of breeds…

• The need for an additional layer of reporting and

dashboarding solution is even more crucial with « prêt-à- porter » solutions, stereotyped and monolithic

• By adding an ETL type solution, you can customize reports

while consolidating data into one single tool

• As customization will become quasi impossible at TMS level,

need for developing what is missing at an upper level

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The need for an additional layer of reporting and dashboarding solution

• Predicting future of TMS’s development is tough.
• However, it would help understanding how the market will change in the coming years
• It would also increase your ability to strategize your technological implementation

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(3) Predicting the future of IT…

“BE CURIOUS, STAY INFORMED AND OPEN YOUR EYES… DON’T WAIT AND SEE”

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Where will we be in 2025?

• Need for modernizing corporate treasury architecture
• In a digital-treasury era departments need to adapt as function also evolved
• However, some treasuries still have the same architecture and tools for ages… It is

what I call the excessive treasurer conservatism

• Difficulty is to determine what holds promise and what is a distraction in innovations
• Many treasurers struggle to thrive in their expanded role
• Treasurers are at a cross-road… even if they continue to languish under antiquated

technology and processes

• Software as a Service or cloud-based solutions can help
• Immobilism is not an option although SaaS and change of supplier is not necessarily

“the” solution!

• Great hopes with predictive analysis, algorithms, BI,… which will offer a multitude of
• pportunities to use data more effectively

Let’s change treasury for good!

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Conclusion: are Treasurers “conservators” or “modernizers”?

for more information:

François Masquelier, Chairman ATEL

Twitter: @FrancoisMasquel Blog: https://mytreasurer.wordpress.com LinkedIn: ATEL group